Daily Forex Forecast 05/12/2011
Australian Dollar: The Australian Dollar has been unwillingly pulled south overnight as a sharp decline in commodities and a stronger Greenback dominate the markets. Gold lost more than $20 in value and oil dropped back below $100 per barrel, pushing the Aussie from its perch at 1.0880 to a low near 1.0660.
[Sign up here to get this report delivered to your inbox daily]
Opening barely back above 1.0700 this morning and with the international environment the way it stands currently, Aussie bulls can only help but look to domestic data for support. Key unemployment figures are due for release later this morning and such data always has the potential to bring with it a degree of volatility. On the downside the Australian Dollar has established support at 1.0660 and on the upside it would be most likely to run into resistance around 1.0880.
We expect a range today of 1.0660 - 1.0880
New Zealand Dollar: A dramatic fall in commodities overnight pushed the New Zealand Dollar almost a cent lower during offshore trade. After trading comfortably between 0.7940 and 0.7960 for the best part of the Asian session a combination of risk aversion, Greenback strength and falling commodity prices sent the Kiwi to a low of 0.7870.
[Sign up here to get this report delivered to your inbox daily]
Opening this morning marginally off these lows the Kiwi is still struggling to break back through the 79 cents handle but against the Australian dollar it has manages to reclaim some ground. As a fellow commodity currency the Aussie has suffered to a greater degree in this latest pullback and hence the New Zealand Dollar is trading at 0.7380 this morning's open.
We expect a range today of 0.7820 - 0.7930
Great British Pound: The winner overnight is unequivocally the Great British Pound, as the Bank of England sounded hawkish remarks following the release of its quarterly inflation report. Sterling advanced against all but one of its 16 major counterparts, reversing recent downward trends against the Euro and the Greenback. The central bank cited that inflation is expected to be 'markedly higher' in the near term, boosting speculation that borrowing costs will finally rise from record low levels. Cable leapt through the 1.6500 barrier to a high around 1.6510 and the Pound rallied to 1.1520 against the Euro. A decline in commodities and Greenback strength in North America meant the USD pared most of Sterling's gains however this was not the case for all cross rates. Opening this morning the antipodean crosses are higher at 1.5280 against the Aussie and 2.0710 against the Kiwi.
We expect a range today of 1.5200 - 1.5350
Majors: The Euro dropped against most of its major counterparts and was the worst performing currency overnight, sliding 0.7% against the Greenback. Fuelling the slide were concerns over the possibility Greece will need additional aid and speculation European leaders are slowing the drive to grant such aid; giving rise to the possibility Greece may need to restructure its debt.
[Sign up here to get this report delivered to your inbox daily]
Sliding from 1.4420 the shared currency eventually found support around the 1.4200 mark and we open there this morning. Strong risk aversion in the markets as well as a fall in commodity prices has helped the Greenback and the Yen extend gains across the board, with the US Dollar setting fresh highs against most of its rivals. The safe-haven pair have battled it out between 80.60 and 81.25 and despite a wider than expected Trade Balance, the Greenback opens slightly up at 81.10.
Data releases
AUD: Employment Change; Unemployment Rate
NZD: Business NZ Manufacturing Index; FPI m/m
JPY: Current Account; Bank Lending y/y; M2 Money Stock y/y
GBP: Manufacturing Production m/m; Industrial Production m/m
EUR: ECB Monthly Bulletin; Industrial Production m/m;
USD: Core Retail Sales m/m; PPI m/m; Unemployment Claims
More from IBT Markets:
Newsletter: To receive Global Markets update, sign up here